Mobile Apps and Terms of Use: the Instagram Debacle

instagram 200x300 - Mobile Apps and Terms of Use: the Instagram Debacle

Mobile app developers frequently need to update their Terms of Use, prompting the familiar but often ignored, “Terms & Conditions Have Changed” iPhone alert.

The updates usually accompany new technologies and services, and do not represent policy shifts or noticeable service changes; hence the heedless recipient. But as the recent Instagram controversy shows, providers should avoid hiding big changes in small print.

Instagram is a mobile application downloaded by more than 80 million users to date. It allows users to stylize and share photographs and other images using a variety of preset filters. Late last year, Instagram unveiled its new Terms of Use policy that included the following clause:

“You agree that a business or other entity may pay us to display your username, likeness, photos (along with any associated metadata), and/or actions you take, in connection with paid or sponsored content or promotions, without any compensation to you.”

Thus, it seemed, by uploading photos to Instagram, users were deemed to have consented to use by others of the images for advertising materials. To add injury to insult, users would be neither notified nor compensated for this use of their images.

Alert users did take notice of this “update.” The internet erupted in a firestorm of criticism as well as widely circulated articles from Gizmodo, Slate, CNET, Wired, Mashableand major news outfits like the New York Times disparaged Instagram’s “Instagrab.” The public relations nightmare, coming three months after Facebook completed its acquisition of the photo-sharing site, resulted in the unique coming together of Pink with Kim Kardashian, and prompted an abrupt about face and mea culpa from CEO Kevin Systrom, who insisted, “Instagram has no intention of selling your photos, and we never did. We don’t own your photos, you do.” It appears as if Instagram was not really seeking to steal and profit from misappropriation, but probably issuing an overbroad provision to try to protect itself for the future or in the event of inadvertent uses of users’ images.

Unfortunately, Instagram’s retraction was too little too late. The app continues to hemorrhage active users. It also found itself the subject of a lawsuit challenging the class action waiver and liability cap in their revised Terms of Use. (Given the approval of clearly worded and conspicuously posted class action waivers by the U.S. Supreme Court in 2011, AT&T Mobility v. Concepcion, this challenge won’t be an easy one.)

Now a month later, the storm has calmed, but not disappeared. Instagram’s amended Terms of Use went into effect on January 19. Stories continue about the application’s fate, the sufficiency of its privacy settings, and data privacy in general. The new rights language is similar to that found on many file sharing apps: “… you hereby grant Instagram a non-exclusive, fully paid and royalty free, transferable sub-licensed worldwide license to use the Content that you post in or through the Service, subject to the Service’s privacy policy…” The impact of the controversy on the app’s market remains. Almost half of Instagram’s daily users have abandoned the application. According to AppStats, a service that monitors the usages of apps by those logged in through Facebook, Instagram’s active daily users declined to 8.42 million from 16.35 million the day before the ill-fated announcement. Although Facebook argues this data does not show the complete picture, the extent of the losses Instagram may have sustained should put all app developers on guard.

A caveat to app developers who think Terms of Use and Privacy are largely “boiler plate” or that revisions to them are a simple matter of course: when creating a social network, developers should not underestimate the community they bringing into being. Users are often sophisticated and vigilant about their online rights, and they know how to demand respect.

Lizbeth Hasse

Lizbeth Hasse

Lizbeth Hasse is the founder of Creative Industry Law. Her practice encompasses intellectual property, media, entertainment and business counseling for corporate and individual clients. She is also a neutral expert in these areas, negotiating and resolving IP, business and media matters.
Lizbeth Hasse

About Lizbeth Hasse

Lizbeth Hasse is the founder of Creative Industry Law. Her practice encompasses intellectual property, media, entertainment and business counseling for corporate and individual clients. She is also a neutral expert in these areas, negotiating and resolving IP, business and media matters.